Editor's Note:

The stock market's intermediate trend is down and there are plenty of potholes along the road that could derail any rebound attempt. The next three weeks could see a rash of earnings warnings prior to the onset of Q2's earnings season in mid July. The FOMC meeting and Bernanke's press conference on Wednesday could be an excuse to hit the sell button again.

Why buy stocks now when we might get a better entry point another -5% or -10% lower in the next three or four weeks? That's the question you have to ask.

I am not adding any new bullish LEAPS candidates tonight. We need to exercise patience and wait for the right entry point. Hopefully we'll see a capitulation type of sell-off soon and then we can re-evaluate potential candidates.



New Watch List Entries

None, no new watch list candidates


Active Watch List Candidates

AGN - Allergan Inc.

AXP - American Express Co

BCR - C.R.Bard Inc.

HSY - Hershey Co.

MCD - McDonald's Corp.

PEP - Pepsico

T - AT&T Inc.


Dropped Watch List Entries

Visa (V)


Active Watch List Candidates:



Allergan Inc. - AGN - close: 80.84

06/18 update: AGN has spent the last couple of weeks consolidating sideways between the $79.00 and $81.50 levels. Friday saw a little relative strength but the rally stalled at the top of this trading range. Some of the technical indicators on the daily chare are turning bullish again. Nimble traders may want to consider buying a breakout past $82.00 with a stop loss near $79.00. The newsletter will continue to wait for a deeper correction. We have a buy-the-dip trigger at $75.50 and we'll move our stop loss to $72.00, keeping it under the simple 200-dma. Our long-term targets are $85 and $97.50.

Buy-the-Dip trigger: $75.50

BUY the 2012 Jan $80 call (AGN1221A80)

- or -

BUY the 2013 Jan $85 call (AGN1319A85)

Originally listed on the Watch List: 06/04/11


American Express Co. - AXP - close: 48.50

06/18 update: AXP managed a nice bounce on Thursday as the stock rebounded near the $47.00 level but the rally stalled under its 50-dma. Technically the $47.00 level should be support thanks to this level being prior resistance. If you think the market has bottomed then a bounce over $49.00 with a stop under $47.00 could work. I am not convinced the market correction is over so we'll wait and keep our buy-the-dip trigger at $45.50 with a stop loss at $42.90.

More conservative traders may just want to wait and see where AXP is trading at the end of June before considering new positions. Our long-term targets are $55 and $65.

Buy-the-Dip trigger: $45.50

BUY the 2012 Jan $50 call (AXP1221A50)

- or -

BUY the 2013 Jan $50 call (AXP1319A50)

Originally listed on the Watch List: 05/21/11


C.R.Bard Inc. - BCR - close: 108.67 change: -0.00

06/18 update: BCR is still consolidating sideways although it has a bearish trend of lower highs. I'm expecting a correction down toward the early April highs near $101, which should be support. At this point a pull back that deep would require a breakdown under technical support at the 50-dma and 100-dma. We may have to adjust our strategy if BCR finds support near the 100-dma.

Aggressive traders might want to buy a dip near $105. I am suggesting we buy long-term calls on a dip at $101.00. If triggered we'll use a stop loss at $97.75.

Buy-the-Dip trigger: $101.00

BUY the 2012 Jan. $105 (BCR1221A105)

Originally listed on the Watch List: 06/11/11


Hershey Co. - HSY - close: 55.66

06/18 update: HSY has been showing relative strength. Traders bought the dip near $54 and its 100-dma this past week. Now HSY is testing resistance near $56 and its 50-dma. Many of the short-term technical oscillators have turned bullish again. Nimble traders may want to reconsider their entry point and look at dips near $54.00 or a breakout past $56.50 as alternatives. I'm not convinced the market's correction is over yet so we'll leave our buy-the-dip trigger at $52.25. If triggered we'll use a stop loss at $48.75. Our long-term targets are $60 and $64.

Buy-the-Dip trigger: $52.25

BUY the 2012 $55 calls (HSY1221A55)

- or -

BUY the 2013 $55 calls (HSY1319A55)

Originally listed on the Watch List: 04/02/11


McDonald's Corp. - MCD - close: 82.52

06/18 update: MCD is another defensive name that has been showing relative strength. Shares added to their bounce from short-term support at $80.00 and now MCD is nearing resistance at its all-time highs near $53. I am not willing to chase it at least not with the market in a downtrend.

Currently our plan is to launch positions at $78.50. If triggered we'll use a stop loss at $75.75, under the simple 200-dma. Our long-term targets are $89 and $99. The P&F chart is suggesting a $113 target.

Buy-the-Dip trigger: $78.50

BUY the 2012 Jan $80 call (MCD1221A80)

- or -

BUY the 2013 Jan $85 call (MCD1319A85)

Originally listed on the Watch List: 05/21/11


Pepsico, Inc. - PEP - close: $68.72

06/18 update: PEP has now spent two weeks consolidating sideways but you'll notice that shares have a bearish trend of lower highs. This would suggest the correction is not over yet. Right now our plan is to launch bullish positions on a dip at $67.00. More conservative traders could wait for a dip or a bounce near the 200-dma closer to the $66.00 level instead. If we are triggered at $67.00 we'll use a stop loss at $64.75. Our targets are $75 and $79.

Buy-the-Dip trigger: $67.00

BUY the 2012 Jan. $70 call (PEP1221A70)

- or -

BUY the 2013 Jan. $70 call (PEP1319A70)

Originally listed on the Watch List: 05/14/11


AT&T - T - close: 30.77

06/18 update: AT&T has been bouncing between $30 and $31 this past week. The stock has technical resistance at its 50-dma overhead and round-number support near $30 below. I am still expecting a dip toward $29.00 and its simple 200-dma. We have a buy-the-dip entry point at $29.25. Let's keep our position size small to limit our risk.

If triggered at $29.25 our stop will be $27.90. Our long-term target is the $36-40 zone. AT&T doesn't move very fast so we will need lots of patience.

Buy-the-Dip trigger: $29.25 (small positions)

BUY the 2012 January $30.00 call (T1221A30)

- or -

BUY the 2013 January $30.00 call (T1319A30)

Originally listed on the Watch List: 04/09/11


Visa Inc. - V - close: 74.43

06/18 update: I'm cutting Visa loose as a candidate. Shares have been churning sideways on either side of technical support at its 200-dma and I suspect shares will drop toward support near $70.00. Our plan was to go long on a close above $82.50 but that could be a while to achieve. We'll remove V as a watch list candidate tonight. Readers may want to keep the stock on their own personal watch list to see if support at $70.00 holds are not.

Visa never hit our trigger to open positions.

Originally listed on the Watch List: 06/04/11